in the first three days in stores. meanwhile, there is a brawl in a china production facility. those are picture from the plant. >> they haven't said whether it's a plant that makes iphones or not. anyway, that does it for us today. right now it's time for "squawk on the street." good monday morning. welcome to "squawk on the street." i'm melissa lee live from the new york stock exchange. let's see how u.s. futures are setting up. we are looking down across the board at the three major indices. taking a look at german, sentiment fell for a fifth consecutive month for lows not seen since february 2010. the biggest losses felt right now in spain. our road map this morning starts

with apple. five million is the number. five million sold during the first weekend of sales but that was short of expectations. down about 15 bucks a share after retailers were given a handful of phones for launch day. >> another beat estimates and this time it is lennar. meanwhile, the earnings for k.b. homes was beat. >> some wonder whether it may be time to take the money off and sit out the are rest of the year. >> welcome aboard, united health care. make yourself at home. unh replaces kraft whose new name is really, really weird. >> yeah. >> mondalese.

it's very unusual. meantime, apple announcing they sold more than five million iphones in just three days but that's less than the eight to ten million expected. apple expect the iphone 5 to be available in more than 100 koush countries by the end of the year. it's very for giving of this first quote/unquote miss on the sales number. >> when you can't find one, when you go to your verizon store and they don't have it, it tends for me to think, well, listen, i have to come back until i get one. i would be more concerned if it was one of those situations where people said, i can't get the iphone so i'll just go buy the samsung and i don't think that's going to happen. >> or if you went up to 14th street, which may be the closest apple store -- no, there's one closer down in soho and they had them and nobody was buying them.

then you would be concerned. >> no. >> nobody has them. >> no. and i just find out that in the end that's more important than the number they did. obviously if they had another two million sitting around -- >> yeah. but if they had another two million, they would have sold it. they've got to ramp up production, don't they, melissa, half a million today now. >> one of the biggest product launches, they would have ramped up production prior to -- the question is, why didn't they have those phones? >> because they were supposed to start in january and they started in september. >> it takes a while to ramp things up. they had five million. that's nothing. >> and it's also difficult when there's a riot at your manufacturer. it's unclear whether this violence is the one where they make apple products. >> apple is secret about everything. we're beginning to find out some

companies don't have enough inside apple, others don't. apple remains this core mystery to people, meaning that -- apple's one of those companies where, like where did this eight to ten million come from? i don't know. it came from guys whispering. did they want the stock lower? >> analysts saying six million phones, six to eight million phones over the first weekend, . it comes at five, they are not whispering in anyone's ear so you can buy the stock. these were based in some sort of fundamental analysis of what was going on. >> they didn't know. they didn't know what parts were in it, how many parts were built. they knew very little, like the quarter, that the analysts don't have good information. and then you get these big selloffs based on analysts that

don't know anything but obviously still speak. it's incredible to have -- it's almost like a line in the nfl. it's like, geez, they were so wrong but so what? next sunday come up and we're going to trust them again. >> we don't have replacement refs working on it but down 2% since july 29th and also the journal says the components, the costs to apple of the components of $197 is only $9 more than the 4s when you've got to imagine it's going to sell for a lot more. >> a phone that average costs 650, 700, remember, the carriers are subsidizing almost all of that price and that will go down over time. months from now that will be

even cheaper. the more components that are paid, the less they will be paying for. they simply say they didn't -- they made as many as they could, ramped up production, may be as high as half a million phones today coming out of china. they visited every store they could, these guy. they didn't find any for sale. the $9 that was talked about in overall cost is a very positive sign, they would claim. >> what's the likelihood that they are actually underdelivering on purpose to drive scarcity? >> everyone is trying to meet the demand. the stock ran up furiously ahead of this. they had said, if apple were a conventional company, they might have said, we had 12 million in demand. we met 5. apple doesn't play it like that. apple's not about the stock. and that's a long tradition with steve jobs. it's about the product. and if they wanted to manage expectations, they could have

said, look, if you just call target and best buy, call all of the companies, we have 15 million. they don't do that. apple doesn't play it the way other companies play it. they don't have to. they are not like any other company. >> there's one other tid bit here. the ft says it's not unthinkable that apple gets added to the dow and people making those choices are different than s&ps involved in the index and that you split like a 3 to 1, maybe, 2 to 1, bring the price down. and also the idea that managers are not as closely tied to the index as they used to be. >> would you rule that out, apple being added to the dow? and i guess the key part of that is apple agreeing to a stock split because that in the past, steve jobs had made it clear that he was not in favor of a

stock split and a lot of things, now that steve jobs is gone have happened, a dividend. >> i think i come back to the fact that tim cook is not sitting around thinking about how to get that stock up. >> it doesn't necessarily mean anything in terms of the stock moving up, as you've pointed out. >> so many people are next to apple. >> apple is the index in the s&p. it's an enormous percentage given $660 billion stock. it talks about a trillion dollars. >> okay. i can do math, too. thanks. >> that's a short-term top. we talked last week. remember, david, you said anybody who doesn't have it is not in apple stock. maybe they've got to rethink. normally you would have felt that apple rounds up and everyone has to and here maybe this break allows them to not

show apple. >> i thought maybe this break allows them to go in and show that they own apple. >> i think that they are not in it. >> who are those people? >> people who follow sundance, who are those guys? >> meanwhile, shares of lennar up sharply. home builder reporting profits above 40 cents. a sixth consecutive quarterly increase. this comes after a 52-week high or multi-year highs on friday and this morning, the average 32-year mortgage is 3.48. is the sector anywhere near being done? >> lennar traded in the '60s before the housing electric because all of the homes on short sales, where your mortgage is underwater, bank have stalled

and stalled and stalled those. it's really hard to buy those. the good thing about lennar, stewart miller has done a remarkable turn here with 500,000 houses being built rather than 1.3 million and these stocks remain the stocks that have the best possibility of doing better. we don't have a lot of new homes. we have homes for sales but they are not the kind of homes you can go in and say, listen, i want to bid x and get them because the bank owns it. and when a bank owns a home, it's a terrible sale. >> the san lifts said the point of concerns with these names is the increased price of materials and the usgs, they are getting their piece of the pie here, too. >> the average home price for toll brothers has gone up remarkably. they've been able to pass on these costs because there's a dirth of new homes. lennar managed to buy land

cheaply, they've managed to build homes for less money. stewart miller obviously to the late leonard miller, he's done a remarkable job. it's a joy to behold. >> and it's important to know that average selling prices have gone up. kb homes, the average selling price has gone up. even though we see costs rising to build a home, the costs are going up. that was actually part of the jpmorgan price target increase on kb that came out this morning. they raised their estimates as well as the estimates saying the balance sheet supports growth well into 2013 and that makes it very unlikely that there will be an equity raise. >> it will be diluted when it does well. when you see the worst steel company do well, kb homes has been a company that made you think, well, maybe this housing rally is not for me. now they are on board.

maybe there's a home builder that is not doing well that's hard to find. >> and a lot of positive language wij here in terms of mr. miller, in terms of not just bottoming but recovery well under way were his words. >> it's a bread spot. obviously things that go into a home. i had alex smith on. a lot of stocks are lower. it's not the fact that the market looks horrible. but i think the housing theory when the smoke clears will still be in tact. >> down sharply this morning on investigation. >> yeah. >> there's a stock that split. it split three ways. >> yes. >> what a bizarre week that was last week. >> people hate that stock. >> a lot of heavy shorts in that name. >> let's move on because it is the last week of third quarter

so all of the major indices are posting their best quarter it two years. dow is up 5.4% and s&p is up 7.2%. the 11th monthly gain with the month of may being the only exception but "the wall street journal" says money managers are considering sitting on the sidelines for q4 because it may not be worth it to gamble the gains that you've had already when you can show a good year. >> but 90% of money managers have underperformed their benchmark. >> true. >> you have to hope that that article is true and buyers sit on the sidelines and you get dips and you can get in. articles that presume that they sit on the sidelines don't understand the money management business. it's getting assets in. it's not about preserving gains, it's about making money, doing better than the benchmark or else you will lose assets.

sure, maybe they are sitting on the sidelines. maybe the 10% to beat the market, they should lock their money in. >> i understand if you want to take risk off as a manager because you ascertain that risks are higher and thereforeyou don you don't take as much. i'm up 20% and i'm going to go out into the year. >> you can't do that. they don't like that. the guys don't like that. they are looking and saying, wait a minute, germany is up 25%. you weren't german. you weren't short china. you missed apple. i'm wiring it to the guy that got it right. there's only a few guys that got it right. you may see articles that say that these money managers are going to cost. unless they poll thousands of money managers behind the averages, i find those stories to be not that useful. >> so you believe that the relative performance chase as a thesis will remain in tact as we move into the fourth quarter?

>> most of the people whose money you're running are saying, how could you not have done better? did you really -- did you really hate this rally? because i'm not paying you to hate or like a rally. i'm paying you to beat the rally. >> hate the rally. what is there to hate? >> i really hate the fact that a lot of people are making money except for me. all right? that's a hate. >> that's called sour grapes. >> of course, this year we'll probably have another year of performance which will be interesting to see when we wrap up all of the numbers and we still have a fourth quarter to go. it's an amazing business. >> yes. it's an apple related -- look at all of these stocks related to apple. they are all going down. all of them. >> to clarify what is in the five million count, because the stock is trading so sharply in reaction to the five million number which came in below many analysts' ex pepectation, what

sold into the apple store is counted as five million. if they ordered the phone online and it's being delivered for them and they have not signed for the device, gotten physical delivery of the phone, his point that he's making is that those phones could total in the millions. that number could get ratcheted higher. that is important to keep in mind. this is, again, brian marshal of isi. >> i always felt -- i bought phones from verizon and when you look up -- when you hook up an iphone, unless you've ordered verizon, it doesn't go just like that. there are a lot of things involved with buying an iphone that are not like going to buy a toy and it's just -- it isn't recorded immediately. now, i think that that's an interesting defense. i think that there's an overall a belief -- that's going to take time to disseminate.

>> we'll see. we'll see. it's an important point to make. a lot of people have not yet signed. there was a sunday involved. so we don't know when these are going to be -- >> i hear people are using the phone is how fast it is. >> yeah. >> 4glt. >> that's a revelation. >> it takes so long to have all of these sites that have great games when you're in that 3g, you just want to kick yourself. 3g is now what non-hdtv is. what are you doing with that? i can't even see. >> it's a great way to watch highlights of the eagles game. oh, wait. >> oh, that was rough. >> did i do something? >> when we come back, going for the gold. we're seeing a pull back today. are we at the right entry point or should you stay away? one more look at futures. a little bit of negative action.

we've not seen a 1% decline on the dow in 62 trading days. a lot more "squawk on the street" in a moment.

the new york times reporting that apple could be the first company ever to be valued at $1 trillion. that brings us to the squawk on the tweet. fill in the following sentence. only then will apple be able to do blank. tweet us @cnbcsquawkst.

that would be a whole lot of cash. apple has a lot of cash now. >> it's funny, the first thing i said was, listen, they have enough money to solve the maps problem. whatever is the maps problem -- >> they could bail out europe. >> yes. >> so many things. i think that's why they are not able to reach the $8. >> do you think merkel will go to apple and say, listen, this is a problem that we all have to share? >> i would love to hear that. >> well, maybe everybody should get a check from apple and solve this problem. >> it would be a real stimulus. >> yes. >> who was it today that said it

was going to add point to the gdp? if they are going to add points to gdp, have all of this passion, it's only fair that they pay a public policy role and solve the world issues. maybe growth from japan. >> that's right. >> $100 billion to make up for t. >> redistribution. >> isn't it time? isn't it time? >> it's time to listen up. all right. it is the first day of the trading week. let's look at futures. we're looking at an open. apple is looking to open down $15 a share. we'll see how it does when "squawk on the street" comes right back. at optionsxpress we're all about options trading. we create easy-to-use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! we knew you needed a platform that could really help you elevate your trading. so we built it. chances of making this? it's a lot easier to find out if a trade

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some call it the mad dash, some call it the mad sprint. either way, jim is ready to rock this week. we're going to look at darden. some people are saying enjoy the ride. >> this is the issue that i have with darden. jp takes it off. here's the issue with darden. they missed an olive garden. they are switching to a more value-added approach. i don't want to give up on the stock. they are doing remarkable things but nobody want to champion their loss, darden's gain. >> none of the other chains are able to offset the weakness although gas prices are coming down a nickel or dime?

>> there's always been a link a linkable. they are talking about putting up a lot more restaurants. i like darden. >> you're looking at container stocks. >> suddenly you're getting all of these credit suisse saying we've got this one wrong. when you see this pattern in an environment where there are not a lot of good stock patterns, people say it's a well-run company, it's been fabulous, they've got more container boards than after. i like i.p. it goes higher. >> here's what is so weird. everybody is betting that macro is going to be so week that there's so weak that the container board could happen. so much weakness it may not able to jive with this piece of data. >> nice work. >> thank you.

>> we'll get the opening bell when "squawk on the street" comes right back. we don't call this our company, we call this our mission. green toys teaches children that if i have a milk jug and i stick it in the recycling bin it can turn into something new. chase allows us to buy capital equipment to be able to manufacture in the states to the scale we need to be a global company. with a little luck green toys could be the next great american brand. find what's next for your business at chase.com/mainstreet

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's. we kick off the final week of the third quarter. a lot going on involving economic data. we get earnings even from the likes of r.i.m.m. and nike. we're at the podium of the big board where i guess they put it on the platform. the maker of knives, scissors, and first aid kits. you often need a first aid kit if you do something wrong with a knife. sandvik, a high-tech engineering group. over the weekend, barrons saying

it's worth 15 bucks. >> i don't read barron's. >> religion? >> no, not a secular religion. but i've read the news clips. management, if you're management, saying, listen, we've been getting a much better results of facebook in the last few weeks. the mobile strategy is really paying off. i think it would be -- i do not like the tone of the piece and just when i think that it's working for them. >> it does seem a little backward looking. they do say surprising the degree in which they misjudge when they were working on the desktop. keep in mind one big reason that the stock is down today. meanwhile, an employee meeting will be held tomorrow in which they focus on the user experience but we're told that

even at the expense of profitability in the short term. >> they are returning most of the proceeds from the sales of the stake to shareholders where they without there might be a possibility that she would use more of that cash to pursue the strategy, still not fully defined. it's a turn around of the core business. when you talk about analyst targets at $19 in a couple of years, based on two years ebitda, there is not a great deal of expectation for this company in terms of its core business. >> it's so funny to me because when i think about this company, i was doing some work on zillow, which i have tonight on "mad money." when zillow tied in with yahoo! it was game set match. a tough one but zillow has to tie in with yahoo!. if you still get the tie in with yahoo! why does yeah too do better from the tie ins? >> maybe miss meyer will figure

it out. >> in terms of the tone of the overall market, you can look at the moves not just in the broader averages but also in oil. oil is pulling back today.day. gold is pulling back pretty sharply after, you know, making that golden cross. technically speaking, gold was very good last week. it's pulling back right now. the euro, u.s. dollar is down by .06 of a percent, below 130. we're seeing this risk being dialed back on this monday morning. spain is the biggest percent declines at this point the question is whether or not spain will actually ask for a bailout. that's a good question. it's disappointing. >> it's rather extraordinary. i remain a believer in the idea

of rocket ship moves, not just total straight up and we were astonished whenever they come down. and the amazing thing is that they went up and i think that a pull back is reasonable as we await better news. but we need something to justify it. >> sales and earnings for six months of the year, they came in very strong, actually. earnings are up 60% in the first six months of the year. asia revenues were up 30%. leather goods which makes up two-thirds of its sales were up 52% and that really speaks to the story that we referred to last week, a very similar where they did have strength overseas. they having a lot of leather goods in their product mix did very well there and to the de detriment last week. we are seeing weakness in all of the luxury stocks. >> piper goes hold to buy.

coach is rumored to be another shortfall. i think that people have to understand that this is a merchandise business. it seems like the right merchandise seems to trump an economic cycle. >> if people will figure out what they want, this ey will bu it. >> people don't think of the stock as firm as they ought to. i find once again that we want to shoehorn an economic thesis that says cores cannot be good and then cores is good. product cannot be good. sometimes imperial work does trump an economic hedge-fund driven thesis. >> it's at the highest of the high end, right? >> it's extremely high end, yes. >> wearing the prada suit? >> ask me the woman who owns not a single prada item. >> really?

>> too rich for my blood. too rich for my blood. >> prada is one of those stores that i really do blanche when i go in to buy. in the end, it really is just red leather. >> you go in there? >> of course i do, i want to see what people are buying. >> of course, i want to see what people are buying. >> he goes everywhere. >> the company was talking about the conversion to lamar. not lennar. they are looking to billboard and change because there has been a precedent for billboard reads and the stock could be well north of $45 a share. >> significant shareholders, american towers where significant real estate is held.

>> 3% on lamar. >> there are a lot of companies trying to come up with something that brings value and these value bringing out cases have worked. they have worked. >> i bring up lamar because there's an active shareholder pushing on las vegas sands. now he has his own investment company putting out a report that las vegas sands should break up into three companies to reduce its value. if they spun out the shopping mall and hotel, they traded the casino company on its own to be a pure play casino, that could really drop the value of lbs. >> these are all situations. obviously las vegas sands is a macau play. when you strip away what makes

them great of being ancillary businesses, anyone who has been to the sands -- if you have been there -- i don't know if you've been there in las vegas, up want the shooting match. it's more exciting than the guys that don't have it. >> we're seeing las vegas sands right now trade to the positive on the down day of the markets. in the meantime, let's go over to courtney reagan in for bob pisani today. >> hello. the euro is sitting on a two-week low. you have merkel in a meeting but they can't agree on a timetable for when to have an oversight. the spanish prime minister meeting with mario amonte about possible strategies. perhaps we'll hear something later this week. and greece could be $26 billion short of aid. prime minister says give them time bringing it all back here domestically, it looks like the do you is down 46 points.

and then take a look at steel stocks under significant pressure today. citi downgrading ak steel and u.s. steel lowering price targets on both and earning estimates for the next three fiscal years as well as the price premium over europe and china, these factors pulling that sector lower i know we mentioned lennar opening on al five-year high on the back of those earnings. the ceo saying that the housing market is stabilizing and recovery is well under way i know investors want to hear what he has to say about the rest of

the sector. the etf hit a four-year high. four housing reports this week coming ahead. we're going to continue to watch that. last but not least, take a look at some of the automakers. heavy volume today after the canadian workers have reached a four-year agreement and toyota announcing new green vehicles for the lineup over the next three years. jim, back to you. >> thank you. courtney. stocks are going higher even though the cfo is retiring. interesting. let's head to the bond pitch. rick santelli with the cme group. >> thanks, jim. there's not a lot of horsepower in the treasury complex since the fed statement and the subsequent move where rates jumped a bit higher. they've been moderating ever since. if you look at a 24-hour chart, hunkering down here. as the market seemed to be focusing on some of the spon

sponginess and whether it will need a bailout or not, it seems to linger on. if you look at the euro currency, it's easing off a little bit. dollar is easing back from four-month lows and the dollar/yen, even though the move has been small, we're getting close to testing the september 13th lows on the dollar index that were seven month lows and we want to pay attention as more and more issues come out as the state of the japanese economy and the relationship between exporters and favorite customers like china and germany. back to you. >> thank you very much, rick santelli. brian shactman is at the nymex. brian? >> the only thing green on my screen has been the dollar index

and german business sentiment factoring into that and skepticism that central banks will have an impact on global growth. global growth fears are really what are playing out. if you take a look at oil down 1% all morning, although now we're down less than a dollar. 97 cents at 91.92 in crude. john kilduff says we could see something below $90. we did touch a low of 91.25. metals down across the board. ubs coming out with a note saying basically beware of the buy dips. many are waiting for a deeper correction in gold that will allow them to jump in at better levels. it has been quite evident over the last week that buyers are eager to step in on dips such that it's short lived. we'll see how much lower this will be. >> thank you very much, mr. shack man. the numbers are in. at least preliminarily.

the quarter has yet to end. two trends we've talked a lot about on this show. one, m and a has been going know where another monday, by the way. another monday in this key area, key time of the year. after labor day, before thanksgiving where typically we would see a lot of momentum behind potential m and a transactions. there have been very few. this monday is yet another example of that. take a look at overall numbers for m and a. we are coming off the lower quarterly total since 2004 for m and a. that's right. '04 we are down 17% in the first nine months of this year versus last year. not what people anticipated coming into this year, to say the least. u.s. targeted m and a down 20% over last year. that is 2011. so there you see a look at it. we've talked a lot about it.

it is perhaps one of the best signs of a mack of confidence or a lack of confidence among ceos and their at least decision making in terms of taking a big risk. on the flipside, we have an enormous increase in the issuance of high-yield bonds. it's interesting to note, of course, high yield in the past has been used so often to fuel takeovers largely by financial sponsors. we know them as private equity firms w firms. they are continuing to take the borrowing costs down and down and down and yet it has not been fuel for a huge increase in at least the size or number of leverage buyouts. interesting dichotomy there when we look at that. but we are on a record. first time months record high, $231.8 billion of high-yield issued. we've never seen that much issued, of course, many of those coming with coupons that are 5%, some even below for better

credit. certainly well below 6% for so many of those credits and yet, jim, we haven't seen the big deals from the ibo guys. >> it is astounding. you buy another company, you merger people, and fire people and yet you still have better sales. >> in fact, it's coming the other way, the disillusionment, the krafts and tycos of the world, they are not willing to risk the company and much happier to do the incremental deal and even then we're not seeing that. >> and it's not anti-trust. >> it's not an try trust as much as i would say a lack of confidence overall. >> and i want to get my money back if i'm giving to my money to a private equity guy that is

doing no deals. >> do you think they should reward a deal that is not immediately -- >> you ought to do it immediately you have to come up with 2013 numbers. >> that has yet to really embolden a lot of people, a lot of ceos. >> preliminary numbers. there's another week to go. apple could be the first company to be valued at $1 trillion. complete the sentence for us, at $1 trillion, only then will apple be able to do blank. we've got your answer ahead. take a look at this morning's early movers here on wall street. [ engine revving ]

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monday morning, it's a great time for "squawk on the street." apple could be valued at $1 trillion and we're asking you to

fill in the blank. at $1 trillion, only apple will be able to do what? kenneth writes, only then will apple be able to do maps properly. only then will apple be able to buy facebook out of their misery. apple could help lower the national debt. put the bite back into their logo. that's a symbolic gesture, right? >> i think that apple coming back, as you mentioned, i think that apple is, again, people want very much to be able to say they missed the iphone. it's so funny, too. everyone was in the same boat.

>> pairing the losses by more than half, it looks like it's continuing higher and the number does not count the people have that taken delivery and preorders. it's not in that $5 million number. >> okay. >> what's the end number here? how many iphone 5s will they sell? >> i don't know. >> it's going to be a lot. >> demand is demand. >> it's going to be a lot. >> but they will hit one day, they will hit sort of terminal blossom, won't they? >> well, look -- >> as a company? >> i like joe. >> become somewhat complacent? >> we might be dead by then. >> we might but all companies

do. >> the story in the meantime, the thesis has kept people out of it for 85 years. >> what is terminal velocity in this case? is it slow and steady growth at that point or is it r.i.m.m.? it's very different outcomes for terminal velocity. if it's slow and steady, that isn't bad. >> no. listen, someone that comes up with a mousetrap that we haven't thought about. look, the ipad, what do i need an ipad for? the answer is for everything. >> do you need an ipad mini? >> i didn't think i needed an ipod mini. >> we're over there in the general vicinity.

>> the dow is down some 44 points. this would make it two down days. we haven't done that since august 28th. a lot more "squawk on the street" straight ahead. >> announcer: coming up, the weekend is over. it's time to get focused. there's no better way than six stocks in 60 seconds and cramer's got them when "squawk on the street" returns. this country was built by working people.

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let's get to simon hobbs. >> good morning, carl. do you invest in apple or in gold? we're going to talk about the modern day gold rush up 11% but apple is up 72, 73% to date. we're also going to look at lennar that continues to perform. back to you. >> thanks a lot. let's get to six stocks in 60 seconds. we'll start with u.s. steel. citi taking it to a hold? >> this used to be a great stock. you don't have good demand. >> off the pick list at citi as well? >> they raised their price target. give me a break. >> mahaney does it with google. >> you would have thought they would have been dinged by the

map. >> demand fears that bowing is overblown? >> the ceo no one seems to care that the fiscal cliff. >> we're going to get earnings this week for accenture. >> i think it's a tail wind. >> and decker, they say stay away. >> okay. we have zillow. letter z. remember, it's a company on fire and people are worried that the quarter wasn't that good. let's find out tonight by david jaffe. >> thank you, jim cramer. when we come back, the iphone 5 sales number is lower than expected but is the street overreacting? we're back after a break. so, i'm happy. sales go up... i'm happy. it went out today... i'm happy. what if she's not home?

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does this indicate a larger problem at hand? >> plus, gold is pulling back after a major runup in both europe and japan. will this put the brakes on the rally for good? and lennar adding to expectations in the third quarter. is the housing turn around here to stay? >> and facebook gets the barron's treatment saying that facebook is far too pricey. first, back to a key story we're following today, apple missing sales estimates for the iphone 5 on the first weekend on sale. this is as fox con has to close their doors due to a riot. we should note the major reversal in the shares we're seeing so far this morning. joining uses is scott sutherlin, and portfolio of the large cap

growth fund also a long-time apple shareholder. scott, let me start with you. a couple of head fakes. the number looks a little light. it could be millions in the pipeline, still. and then the fox con news, there's a big riot. they don't make the 5 although they do make the 4s. what's your take this morning? >> going into the weekend, people talk as many as 10 million units over the opening weekend. we did some checks and there's a lot of demand and lines out there. apple creates a scenario where almost anything but apple sold out by sunday. again, a lot being in transit. apple is going to fulfill a lot of these orders in october. we are going to have a very strong september. >> scott, i'm curious, when it comes to first weekend sales,

were they around five million? the phones were ordered but not physically signed by customers. how much is that and why didn't we hear that so much when it came to the 4s or the 4? >> when you look at the numbers, we thought as many as 8 million phones over the opening weekend. we thought 10 million would be a stretch. they sold more than five million. this is 25% if not more than the 4s. still a very strong start to it. a little lighter than our numbers. there's going to be a lot of good demand for this phone. >> will there be millions in transit? i'm just trying to get the order of magnitude. because the order of magnitude with a miss when you look at the analyst estimates is fairly sizeable. that's a 20% miss. >> yeah, we try to extrapolate the sign. we thought they could be 20, 25% longer lines. there could be a couple million there in transit for apple.

we also think many consumers already going into sprint stores, which some are selling out by friday, might have turned away and waited until later. apple likes to create a mystique that the demand is a supply constraint problem in the supply chain for apple or are they just once again going to fulfill these orders in the next quarter? >> scott, i was at a dinner party on saturday night that was dominated by one guy that has invested all of his money in apple and he doesn't believe in diversification anymore. he says the stock is up 72, 73% this year. he's in a state of agony. does it book profits now after that run or will it continue to make gains beyond 700?

scott? >> they are going to be in more than 30 additional companies. the second thing is, with the mini ipad, we think the pipeline is full. we think it's a near term hiccup for them. >> michael, don't mean to ignore you. is that the position has become too large a percentage of their overall portfolio and it's a great trap to be in if you were lucky to get in early. >> sure. it's a matter of what is your active position. we're hedging against the 1,000 growth index and that means you're approaching 9% of the

index weight in the growth index as apple shares. you're going to own a couple hundred basis points more. you're constantly trimmingi an oversize position because the performance has been so strong. it's a great position to be in and a problem to have. you have to risk control these type of positions and recognize thaw never want to be too beholden to anyone's security. your buddy at the cocktail party notwithstanding, we are about diversification. you've got to own lots of companies that can grow in these environments. >> given what you've just said, what's a good point around which you trim and add? right? if this is one of your core positions, where do you take some money off and where do you get back in. > . >> sure. broadly we look at active share how much is above the index weight and we'll pull money off the table and be very opportunistic and nimble.

we're clearly excited about the iphone 5 numbers and launch. i think the over five million units is not a big deal this morning. you're going to get some hype in front of the actual data and to see the whisper number get bigger, that happens all of the time. >> michael, given what you've said about apple and seeing that we are about to enter the fourth quarter of the year, are you anticipating capital gains taxes to go higher and i'm asking that in the context of, if you've been a long-term shareholder of apple, you've had tremendous stocks. might you be more likely to trim in that position than others because of the huge gains and are you anticipating a gain in taxes? >> i think folks that ra savvy to that, when you've got a mutual fund or institutional account, we can but, yeah,

investors and retail guys and are you going to sell your entire position? if you're taking a little off the table, it's prudent. it makes sense from an asset allocation standpoint. we believe the long-term trends of apple are pretty robust and we would agree with chris there that the long-term opportunity for their products it still looks quite robust in support oh of why it might go to a trillion we got five years of the smartphone revolution. my question is two fold. can apple stay ahead of the smartphone revolution and, secondly, is it enough to continue to pro tell apple along

or will it mutate into something else? >> i think the direct answer is, i look at apple as a connected device revolution. obviously the smartphone is the key component of apple. but itunes, tieing together the connective devices, the smartphone, the tablets, even the connective tv, the tvs, when you put all of that together, i still see apple having a long-term growth opportunity. tablets are dominating pcs, so if they can get to the 20% range in the price categories, this is definitely in that range. >> i think we could talk about apple forever and some days we almost do. scott, mike, thanks, guys. >> let's go over to bertha

coombs with the market flash for us in the pharmaceutical area. bertha? >> questcor revealing that last friday it learned that the government is investigating its practices and on concerns that aetna will no lon der i am ger i am burst it for key issues on that drug actcar. >> thank you very much, bertha coombs. gold is pulling back and strategists across the board ratchet up their targets. does it have further to go or will europe derail the rally? that's next. or geico...as most of you know it. ...i propose savings for everyone! i'm talking hundreds here... and furthermore.. newcaster: breaking news. the gecko is demanding free pudding. and political parties that are actual parties! with cake! and presents!

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gold prices are easing following the qe 3 announcement in addition to europe and japan. is today's pullback just short in nature? joining us is a cnbc contributor and chief market strategist. good morning. >> good morning, simon. how are you? >> i'm very good, sir. but i'm slightly concerned about gold, given that you had an # 1% run-up over the last couple of months, and arguably today it's got to be to profits, isn't it? >> that's exactly what happened.

momentum guys like me on friday looked for the blast above 1781 and perhaps above 1800, we didn't get a sharp reversal and now all of the markets are down and i think you've got a profit-taking scenario. three things that i'm watching, qe indefinite. that money hasn't hit the market yet. the feds can be very aggressive with 40 billion a month indefinitely keeping interest rates low until 2015. i think gold is still good value here and a good bang for your buck, if you will. i like the report which indicates for the last five weeks we've seen a net gain for large specs. so smart money is piling in. unless we break 1620 on the downside or perhaps even way down to 1520, i think you buy the dips on this trade. >> you know, hi a horrific revelation which i want to share with you. and that is, when it comes to qe and the way to play the fed, it

may not any longer be gone. if you look at where gold is, it's up and the s&p has had twice that gain and apple has had ten times that gain. i wonder now -- >> in response to the feds printing money actually it's far better, far more profitable to buy apple and that is the elephant in the room, isn't it? >> simon, i know you're an apple guy. i'm a samsung guy. i owned apple back in the 200s and i was a genius. i got out at 250. it plays a good part of a balanced portfolio. commodity prices have not hit the super cycle. if we keep rates relatively low for a long time, inflation at some point will creep up. and, listen, this is a great way to balance many people. buy the dip, simon, take the trip. >> many people, richard, were very alert to the fact that the

fed might have abandoned its mandate on inflation when it came through and said it would buy mortgage-backed securities indefinitely. that was a major, major change for the federal reserve and yet gold has not performed that well in the wake of that. given that huge watershed change. >> listen, i disagree with that a little bit. i think 11% is a heck of a gain. and, listen, another fundamental part is central bank buying gold to the tune of 400 metric tons per year and that's a gain of almost 100% according to the world gold council last year. i think these guys are buying gold and it's always going to be a currency, simon, so, again, i think the analogy with the s&p, the apple and the gold really doesn't hold. i think at some point you're going to see gold take off faster than apple, if you can believe that. >> so, richard, walk us to the levels. i want to know what a dip is in gold. is a dip even lower because

you've identified support at 1750, 57, et cetera. where is that opportunity to put that in your portfolio? >> well, listen, we bought the dip this morning. i like 1750 if we stay above that then i like buying these dips that i buy right here. look for the market to drift higher. it's come off the lows. if it closes below 1750, i think we get more selling pressure. by the way, we have opg expiration and it's just below 1800. there's a ton of open interest at the 1800 level. i think we're going to be trapped in a bit of a range and i like buying them against the trend line and it was around 1620 in the last run. >> okay. good to see you, rich. thanks very much for the advice. incidentally, i'm not an apple guy. i carry the blackberry with me. it is a cross that i bear, like a brick, day in and day out. have a good day. thank you very much. >> thank you. when we come back, art

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we are seeing declines across the board. wall street journal reporting that money managers are sticking to the sidelines. here to lay out his take of where we go next. we're taking a bit of a breather here after the qe 3 announcement. what is going on? >> we've had a good run up in stocks and battered around a little bit in the final 15 minutes and people are wondering how will earnings place into

this. there are some hopes that the imf is not going to do the greek review until after the election which may have come from the request at this side of the pond. we can't prove that. and then we -- >> with the german election looming, it's more likely. >> either way they decided that greece remains too big of a problem to solve and rumors that we might see as early as this thursday. those are the hopes and to get some movement in europe to the plus side, the earnings seem to be. >> what is the stronger emotion? buying to show that you owned part of the rally or being able to sleep in the fourth quarter? >> well, i think cashin capital

management, my concern is that there is no risk built into this market we have china and japan having ships go nose to nose and it was a world cup match and iran, the iotola has recalled all of the special forces out there and head of the revolution guard said a battle with israel is inevitable. none of that is in the market. i would have preferred to have seen a better market. >> because it's a liquidity driven fed-inspired, don't worry about it, i'm inoculating you. this is about the fed, isn't it? >> you are absolutely right. >> it's a very powerful phenomena. >> it is. but will the fed inoculate you from a bomb falling somewhere snl. >> well, don't chase the qe ral he look, he talked and the fact

that obama is leading in the polls and the market has to consider the fact that aggressive rises in capital gains tax. that may be a fact. at what point will people sell anticipation of that, do you think? >> i think they are nervously watching and they bought into the qe thing assuming that the gridlock will continue and perhaps from the presidential polls to the presidential election polls. and if there is still not complete control by any one party, the deadlock will continue and the market will be mollified with that. >> you mentioned what you would do if you were at the sidelines at this point in time and "the wall street journal" article was interesting, sort of implying that fund managers were up and will actually sell.

the vast majority of mutual fund managers and hedge funds are underperforming their marks. do you think this is going to be a force in the market, as "the wall street journal" wants to make it? it seems to me that the moneying managers outperforming are in such a minority that even if they went to the sidelines -- >> we've seen it. we've seen people desperately try to play catchup. the best example is apple. people had to, oh, my god, i've got to catch up. let me buy apple and a larger amount than it has in the indices. they do buy that kind of protection but how much of that is going to be a major influence in the market, that's tough to say in here. >> right. okay. art, good to see you. thanks for your time. >> thank you. coming up on the program, shares of lennar soaring after third quarter earnings more than quadrupling. signs of a stabilizing housing market is not enough, it's the rally if we showed you a longer

term rally, too phenomenal now to last. stay with us.

google shares are up 30% in the past three months. united health group trading sclit slightly higher. and shares of questcor

pharmaceuticals plummeting 28%. they are investigating the promotional practices. questcor adds it will cooperate. >> gas prices dropping .04% over the last two weeks. that includes 2500 stations. brian shactman is at the nymex with more on that and what might happen in the days to come. >> i know, carl. there could be more relieve for the consumer because as you look at crude, more than 1 is 1.25%. there's a lag and in talking to all of the traders today, even with oil when you talk about the iran threats, global growth concerns are dominating all of trades here. in terms of the retail gasoline, some say we could get to $3.60 a gallon in the near term. we'll see how that reconciles

itself out and we switch over to the cheaper winter grades, of course. i want to take a quick look at natural gas. selling continues and when you talk about supply and demand, when we're switching over more to nat gas from coal, we have a lot of selling pressure here and of course the only thing to relieve that would be an early arrival to winter. we had a pretty nice weekend here in the northeast and it doesn't look like weather will help in terms of demand for natural gas. back to you. >> all right. brian, thanks so much. in the meantime, lennar trading at five-year highs after an impressive third quarter. new orders are up 25%. delivery up 28. an underperformer rating, $22 target. guys, good to have both of you here this morning. >> thank you. >> why the underperforming? >> it's simply this. no one is taking into account

the 20, 16, 15 multiple, they are trading in mid-cycle and when you think about long story short, there's everybody is c chasing these things right now? >> do you agree? >> this is unchartered it territory in a lot of respects. for us, with lennar, we think it's a company performing and firing on all cylinders and we think it's actually in line with the group. so we're neutral there. and underperform rating on a builder that came through last week on kb home. with will's comment on valuations, i think he's correct. we're pricing in recovery and earnings that we're likely not going to achieve until 2016. >> will, i'm curious, when you went to that sell rating because the stock was up 91% this year and this is a stock and the home builders in general, these are stocks that people have been for the past 5%, 10%, you name it.

>> yeah. what it comes down to simply when you look at this name, you need a 20% return on equity over this year, next year, and this company is only returning 10% at this time. there's no justification for the current valuations and needs to go to a far faster kicker. >> when do you go to the sell? >> in june. >> relative to the group. okay. and, buck, you've got a market perform on this stock in general but in terms of your coverage universe, where are there opportunities? not only the home builders are seeing big runs but the suppliers, the whirlpools, sherwin-williams, where is there opportunity or is there none at this point? >> well, i think toll brothers is an example where i think a lot of people on the street are underestimating the embedded value of toll brothers land bank

and the quality of the land assets and we find that toll brothers, despite being one of the highest quality home builders, it's trading at a discount. that's an idea. pulte is also an idea. it's getting tougher, i have to tell you. we're in unchartered territory in the valuations and we're still finding a lot of difficulty in mortgage availability for first-time buyers and we're not seeing, despite these calculations over rent to own affordability, i would tell you that there's a lot of value in the part ret sector and that group looking out and they are ignoring this year. >> it's fascinating. both of you guys. you've been to the party and you're all deciding who should go, i don't know, i'll stay for one more drink. is there any kind of trajectory, rates, building costs, anything like that that would make you revisit under lennar? >> for the builders in general,

it's just saying internally the administration as well as policy makers push to open up lending standards. i think about 25% of the market is underwater. you open up the flood gates and we don't have that today. if you look what came through in acce september 11th, we're not there yet. >> that's one of the areas that even supporters of the president say that he's falling a bit short. >> yeah, i would agree with that. to get values in this group higher from here, you have to believe in a combination of three things and one is that job growth is going to meaningly reaccelerate from current levels and mortgage availability has got to become more available and loosen up and just the documentation standards have to ease up. third, tough believe that it's going to stay at very low levels despite rising prices.

>> buck, just to be clear here, are you saying that the housing market has actually bottomed? this is now a conversation about how rapidly potentially houses climb from here or are you not saying that we've actually necessarily bottomed? >> no. i do believe we have seen some -- the bottoming. barring an external impact, a fiscal cliff or financial crisis, yes, all things being equal, we've bottomed. it's about the pace of recovery and what is possible. >> you're talking about the effort to make homes more affordable. who would benefit, the first home buyers that might have had credit scores that were bad, et cetera? >> i think it's horton that is down and when wha at it comes t

relative to the group 300 k. they focus on the segment that is harder to lend to. >> there is still a barbell approach and you're in the other end of the home buyers? >> correct. >> randall, buck horn, thank you so much. >> thank you. coming up on the program, we will talk about what is happening with education nation. first, a market flash with chip. with bertha. >> thanks very much, simon. chips is the name here. the worst performing sector, technology is dragging down the market. take a look at the chips right now. micron among those getting downgraded today. the analyst says she expects to see weak pc demand and veeco instruments, goldman sachs to a sell. looks like a valuation sell and $30 price target, covered to $27. david, back to you.

and $250 million coming from verizon, of course, some of its cable operations under the vios division, if you will, $250 million over time, 150 million and also cooperation between the two companies as well, and verizon is going to pay monthly license fees, dvr subscriber, what are predetermined levels as you see it there. tivo has done it with a number of providers out there, intellectual property when it comes to the basic dvr device and a number of thanks it implemented, that it came up with and clearly it's winning on in terms of saying, it's ours,

you've used it, you owe us money for the stock. coming up, education nation. struggling schools and taking a look at challenges, the potential solutions, and innovations spinning the education landscape. i'm at mountain home high school academy. high school ain't what it used to be. how a new mom of schooling may be better for american students to meet american needs. we will have that later. we're sitting on a bunch of shale gas.

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this week education nation brings the public together in pursuit of providing every american with an opportunity to achieve the best education in the world. our own jane wells took part in several discussions covering the challenges and potential solutions spanning the education landscape. jane joins us here.

>> the vibe is amazing. the energy, the aura, it's awesome. but i was in a very different place to do this story. i was in arkansas, a town of less than 13,000 people where to meet the challenge creating america needs, they've taken a big gamble of an extreme makeover. in a high school classroom, two teams compete to build a marshmallow tower testing communication skills and math. across the room other students program music. out back, the principal shows off a pavilion that students built themselves. >> the math classes determined the pitch of the roof. >> and in the gym, the world champion robotics team shows off. this isn't some state-of-the-art private school in a major

metropolitan area, this is a public school in a town of 12,000 people in arkansas. mountain home high school career academies aims to better prepare students for life after graduation. >> i want to go into anesthesiology. >> here students find out what they like, what they are good at, and what businesses are looking for. >> we have over 100 beg will business people that can knit once a month. >> research shows that students who go through career academies earn 11% more often than nonacademy peers. pocketed inside a traditional high school, mountain home is made up entirely of three academies, focusing on engineering, communication, and health care. >> there are more than 300 different kinds of leaches. >> students are grouped together based upon how they are best able to learn. some students know how to write. some students know how to make basketball playing robots. ninth graders are tested and

asked to choose which academy to join, though they can change their minds. >> does it limit them in a way because you get them in a shoot at ninth grade? >> sure. i don't think it limits them. i think it enhances what they already have. we're giving those kids the opportunities already that some kids in other schools don't have until their third, fourth year of college. >> helping the soldiers. >> thomas was drawn to the engineering academy after moving to arkansas from montana. the senior hails from a large line of military men and wants to design body armour. he feels this gives him a leg up. >> i feel it helps me because they don't have things that show them, be hey, if you want to go into this field, this is what it takes. >> reporter: more graduates are going to college since they built the academy. >> i want people to know that our students shine and the reason for that is because they are empowered and they are given

options, choices, and decision making skills before they ever leave high school. >> reporter: now, while more students are going to college, it's not clear how many are coming back to mountain home to work and one other note from research done by nine academy programs in urban areas, 95% of students in these academies graduate high school or get their geds and that's a really high number compared to their peers. >> is there anything that the kids are giving up? are they forced to make long-term decisions too early in life, do you think? >> that has been a criticism but after one year you are allowed to switch academies and you're exposed to other classes so if you decide that engineering is not for me, health care s. you can make that switch and save yourself a whole lot of money. if you went to college and switched majors, you could save thousands of dollars. >> how do they know which area to focus on? looking at the economy and see where the jobs are now? >> they have businesses in mountain view.

they have teachers that are called ex turnships. these are the skills we need. the question that isn't answered yet is, they are training these kids, they go to the university of arkansas, wherever they go, do they come back and work for baxter health care or wells fargo. >> how stable is it? >> it is happening in schools across the country. it's just not happening in mountain home. change is scary to go from a traditional high school and wall to wall academies, it takes buy in from everybody, businesses, parents, students, they have to create it, as the principal said, people support what they help create. >> wow. >> it's a fascinating story. you talk about the long-term competitiveness of the country, this is one potential answer. >> it seems to be working. >> great stuff. it's so nice to have you here. come back any time. >> i will. >> jane wells. next on the program, the "new york times" today suggesting that apple could one day be valued at over $1 trillion. we'll talk to the columnist

behind that article next. and, also, rick santelli working on the next hour of "squawk on the street." good morning to you, rick. >> good morning, simon. as we get closer to putting the tomb stone on quarter 3, we look to quarter 4 and serve thinking what about the fiscal cliff. why the market really seems to not care and the analogy might be similar to, hey, have you ever had a little one afraid of the boogie man in the closet? that's what we're going to talk about at the top of the hour. is there a boogie man or not? government is big on nightlights. lights. have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students.

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nick buiilton joins us on t newsline. >> this is the same thing that was being discussed then. but i think what this really points out -- when i collected all the data for this column and looked at apple as a company,

they're essentially a juggernaut. they're unstoppable. from their retail stores to iphone and ipad sales. the news this morning is they sold 5 million of the new iphones in one week. if a company's going to do, it's going to be apple. >> you make a good point about microsoft. that was the talk late 1999 when microsoft was sort of approaching that as well and never hit. but the key difference between '99 microsoft and 2012 apple is the valuation and the amount of apple cash has on its hands. in terms of the bear case, apple not reaching $1 trillion, what would that be, nick? >> today, you look at the stock, it's down about 1.4%, about ten points. and i think that's because of the map fiasco that's going on right now. apple is determined to remove google from its software because google is one of its biggest

competitors with android and customers aren't happy about what's happening. if they continue to do things like that, that could affect the eventual outcome. but microsoft in the late '90s, the difference is when microsoft peaked in december 1999, it was 20 years in the pc revolution. we're only five years into the smartphone revolution. all apple needs to do is double its numbers and it's well past that goal. >> i think there's something intangible that you're trying to drive at here further, nix. you say in the final paragraph of your article, when apple first introduced the iphone, people slept on the streets to get one. five years later, people are still on the streets to get the update even though it's only a slight variation. that is your concluding thought on the subject. >> yeah, absolutely. if you said to me ten years ago,

people are going to line up in the streets and sleep out for a week to buy a smartphone or a mobile phone, you would think i was crazy. and the fact that people still to this day -- this phone doesn't look that different. the technology is faster and better and the screen is better. but it doesn't look that different than five years ago. but people are willing to line the streets and buy this device. >> the one thing we don't know is china and to a greater degree, the amount of which apple can grow overseas where their infrastructure really isn't in place the way it is in this country. if it happens, there's a very good chance we do hit that magic number. but how do you read a big "if" like that? >> i've spoken to different analysts and one of the projections was that if you have -- in china there are 1 billion people with mobile phones and they are upgrading to smartphones.

you have the opportunity to reach 1 billion people to buy iphones. and apple is trying to reach that market, trying to figure out how to fulfill the market there. and i think if they can pull that off, this number is pretty close. and i think if anyone can do it, it's definitely apple at this point. >> nick, quickly, you mentioned how far we are into the smartphone cycle versus where microsoft was in the pc cycle. isn't there an element of moore's law built into technology these days where the time in which a full cycle will take place will be much more compressed. so that time that we are into the smartphone cycle could actually be part e along than we think? >> yeah, that's why i say ten years rather than 20. i've heard that you have another five years in the smartphone cycle and then we'll switch over to wearable computing. apple's clearly been working on the technology for quite some time.

we'll transition to that. but i think that's still at least five years away. >> nick, thanks for your time. >> thank you. >> that is the bull case there. he's laid out the bull case scenario. and that may be exactly what is in the price now. i think those expectations, that broader view of where we might be going on the rotation of the cycles. that could be it. that could be the point at which you sell. arguably. because there's no further catalyst. what was the further catalyst that he named in there. >> wearable computing -- as long as apple manages to continue making product that is people want -- >> so long they don't make wearable computing. >> nobody makes it for sales yet. >> that's the point at which -- >> don't you think samsung was equally working on a smartphone, so is google and where is apple in relation to them still? >> the vast majority of

smartphones that are actually sold around the world are android smartphones. they are not apple. >> 68%. >> yeah. >> that's where the bulk of the market is -- >> but apple don't go after the lower end. >> there was a time where apple's share of the phone market was zero. that was not long ago. tweet time. apple could be the first company ever to be valued at $1 trillion. brings us to this morning's "squawk on the tweet." at $1 trillion, only then will apple be able to do blank. @cnbcsquawkst. back in a minute. americans are always ready to work hard for a better future.

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"squawk on the tweet" for a monday. "the new york times" reporting this morning apple could be the first company ever to be valued at $1 trillion depending on how things go. we're asking you to fill in the blank, at $1 trillion, only then will apple will able to do what? one tweet says, the wise move and become their own country to save on taxes. and another says, boost their dividend and/or join the dow which the f.t. says is possible. >> what's coming up tonight?

>> we have the activityist investor who says the sands should split into three. we have a yahoo! shareholder ahead of the big meetings expected to happen tomorrow. and we have fiscal cliff plays. we'll get the list, what is an obama stock and is that the way to play the fourth quarter? >> good stuff from him lately. >> definitely. here's what you might have missed if you're just tuning in. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> 900 million people are on facebook. but it isn't much of a business yet. the reason is because the only way they've figured out how to make money is all the adds up and down the sides of the page. it's only when it goes to mobile, there isn't an easy place for those ads. >> you can't have jobs unless we have businesses. you can't have businesses unless

they're financed. and the ability to have an approach to a -- public policy approach to financing businesses is a critical issue for our country if we're going to have economic success. >> when you go to your verizon store and they don't have it, it tends for me to think, okay, listen, i have to come back until i get one. i would be more concerned if it was one of those situations where people said, i can't get the iphone so i'll just go buy the samsung. i don't think that's going to happen. but you really hate this rally? i'm not paying you to hate or like a rally. i'm paying you to beat the rally. hate the rally. what is there to hate? i really hate the fact that a lot of people are making money except for me. >> that's called sour grapes. >> the opening bell, we kick off the final week of the third quarter. >> apple seems to always create the mystique that the demand is outstripping the supply. is there a supply constraint

problem in the supply chain for apple or they creating the mystique to fulfill these orders in the next quarter? >> good monday morning. live here at post 9 at the new york stock exchange. let's get a check on the markets on this monday morning. the dow is negative but has erased quite a few of its losses. we should point out, we've not had two days down on the dow since the end of august and we have not had a 1% decline in 62 trading days. the dow down 24 now. s&p down a little more than two. pandora down today. facebook's down sharply today after barron's says the stock is overpriced. barron's saying the rapid shift in facebook's user base to mobile caught the company by surprise. let's get to the roadmap this morning. apple selling 5 million iphone 5s over the weekend, exceeding

its own supply. but it's still not enough for some analysts expecting sales as many as 10 million. is it a sign of weakness? plus, european markets trading lower after negative data out of germany. what does it mean for your money here in the u.s.? as apple maps flounder, some users are calling for a google maps app. we'll talk to someone who's met with the google maps team about whether apple is in over its head and why consumers shouldn't hold their breath for something from google. and larry kudlow will give us his take on the president and romney's aappearances on "60 minutes" last night. that's coming up in the next hour. first, though, apple selling millions of iphone 5s over the weekend. jon fortt is live in san jose with what the real number is. there's some disagreement about that this morning. >> reporter: there is. 5 million is the number of iphone 5s when one prominent

apple analyst had been looking for 6 million to 10 million. that 5 million compares to 5 million a year to go to the 4s. this doesn't count preordered ich 5s that were shipped but that weren't signed for. if your phone arrived over the weekend but is waiting for you to pick it up, that doesn't count. it doesn't count the 2 m phones ordered the first day but that won't get delivered until today or later. it's too soon to gauge exactly what this means for demand. piper jaffray estimated last week that lines has been 30% longer than they were for the 4s. a couple of other tidbits, the check of about 20 stores over the weekend showed that they were short of iphones. so there might have been quite a few customers who wanted phones but had to wait. plus apple said early this morning, though they sold out of their initial allegation of iphones, they're still getting iphones regularly.

there could be -- munster is estimating 1 million phones that were preordered that weren't counted in this number plus another 1 million that would have been sold if they had had enough. you have to consider that international sales start on friday. but it's still a bit disappointing, based on where analysts put their numbers and considering that a year ago with the 4s, they also had the supply issues. carl? >> i remember asking you on friday if retailers other than apple stores would have them and your advice was to go to an apple store. that was a good call. meantime, this foxconn news, a fight breaks out at a dormitory. what do we know about whether or not that might impact the supply of the 5? >> reporter: hard to say. i was trying to get out of apple what the impact might be. the word out there is that the back plates for the iphone 5s might have been manufactured in this facility which is shut down for the day. what we know about what happened over the weekend, what foxconn is saying this uprising involved

about 2,000 workers. it happened around 11:00 p.m. local time at a privately managed dorm there. the fight doesn't appear to have been work related, it was originally said it was between a worker and a guard. 79,000 workers at this facility overall. that's kind of a big incident. we'll have to wait and see how it affects supplies. >> we have disagreements at the coffee and water cooler at cnbc but nothing like that. tell you that. >> reporter: don't have enough people. let's get to gary kaminsky. he's back from l.a. back from an amazing -- >> i'm cleaning up the set. hobbs leaves me his dirty cold coffee. thanks, simon. >> what did you find out west? >> when you leave town, you always think clearer. it's good to get away. and especially to talk to people outside of the industry that you talk to every day.

i have to say, you had these eureka moments, i think they're called. i had one in the summer of 2007. i was at a lehman off-sit, summer of 2007 in sun valley when i began to get concerned about what was happening. in fact, it was the year before the collapse. but it was really evident at that time that there were a lot of people building up that balance sheet that had no idea what they were doing. when you think about q.e., you mentioned at the top of the show, we haven't had two down days -- talk about the s&p up 100% -- we all know the impact of quantitative easing and what it's done. but i must tell you. we know this will end ugly. in fact, many of the people that have talked about the idea that the fed can't exit, jeffrey dunlop told you. even many of the fed governors have talked about knowing there's going to be an exit have never at this point ever detailed how this exit is going to take place. take a look at the numbers. this is what is -- some of the

smartest people out there have said if you look at what q.e. is, it's going to be $40 million a month. by december of 2014, the fed thinks unemployment will hit 7%. bernanke will have bought $1 trillion in mortgages. the monetary base will be up another 40%. when you think about the comparisons made in q.e. 1, that was about japan, are we going down the road to jap snn think about those numbers f. you look at what's happened here, they may actually be on q.e. 12. if you look at what's happened since 2000 in japan. debt to gdp but more importantly, property prices, 90% off all-time highs and stocks at '1983 prices. i may be a year early and i continue to think stocks are going to go up for the rest of the year for the various reasons we've touched on. but i can't tell to think that when we look back at the exit

strategy, if there's going to be one, it's going to be a disaster and we want to remember, we told you, we said that putting themselves in a situation, building up this balance sheet that they're not going to be able to get out of, i want to time stamp this show and this day. and if you're interested in following up on this, ira harris that sometimes joins the morning show from the cme, he said there was a "wall street journal" op ed piece last week where people on both sides of the political party talking about the magnitude of the mess we're in. this is not a political issue. this is not a political issue. bernanke, talk about japan, is a kamikaze pilot attempting something and experimenting -- let's not de-emphasize. this is an experiment. q.e. is an experiment. and i think it's destined to fail. >> you're not characterizing the level of ugliness, right? you're not talking about -- you're not giving a point drop on the s&p or on property prices when this eventually happens?

>> i think everyone that is an intellectual financial thinker knows at the end of the day, printing money, which is essentially what you're doing, is going to create this type of devaluing of your currency and your purchasing power. again, there is not a person on either side of the political spectrum sh it -- it is not a political situation. the fed is going down a path that i think, it's japan and it's going to happen again. >> when the boj made your move last week, a lot of critics said this is how it will end for bernanke. >> for japan, it hasn't ended. let's hop over to the cme group, rick santelli and the "santelli exchange" on this final week of the third quarter. good morning, rick. >> good morning, carl. the final week of the third quarter, that's pretty much what i want to talk about. there's constant talk on cnbc because we are the world's business channel, where's all the anxiety regarding the fiscal cliff? where's all the anxiety that for the first time in my lifetime,

that's for sure, we look at an entire continent like europe and it could just topple not through warfare but through economic variable, through insolvency, through decades of fiscal imprudence. where's the fear? i think i've put my finger on it. let's go back a bit, back to the real crisis in this country when we were in the lame duck right before barack obama was -- won the election and was sworn in. we had to vote on t.a.r.p. we all remember that. i think t.a.r.p. gives us a huge insight into what's going to happen as we go into the fourth quarter and, quote, unquote, the fiscal cliff. that is, if the market throws a tantrum, our leaders are just so apt to turn on the nightlight guarantee, there's no boogeyman in the closet, whatever it takes. we're looking at the wrong side of the printing press for the fear, the fear isn't on the investors' side. we finally condition them, whether it's ben bernanke or all

the meetings, whether it's draghi, whether it's monti, we've conditioned them, don't worry about anything, don't worry about all the facts out there, we will take care of you, from a financial standpoint, from an entitlement standpoint. we're going to take care of you. so i think the reason there is no anxiety is because no politician or bureaucrat on either side of the pond is going to have the nerve to do anything when the markets throw a tantrum. that's my read. carl, back to you. >> rick, thank you so much. bertha coombs back at h.q. manning the desk for us today. >> paper stocks looking pretty this morning. multi-year highs. international paper leading the s&p at a five-year high. seems the paper packaging guys container board prices up $50 a ton. they're all moving up. carl, you probably have an analyst over at deutsche bank

breathing a bit of a sigh of relief. week before last, he downgraded the group. on friday, he said, they look pretty good. he upgraded them just in time. >> thanks so much. when we come back, iphone 5 sales topping 5 million in the first week. but the stock is lower. we saw a bit of a reversal this morning. we'll sit down with a shareholder and get his thoughts on where the stock may be headed. and all of a sudden, ka-plam. it blindsided us. what is it? our college savings account. how do you think it happened? not sure. i think something we bought a while ago turned out to be something else, annnnnd, i remember a lot of other stuff in there had the word "aggressive" in it. is everyone okay? well, now, yeah. who knows later. ♪

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apple selling 5 million iphone 5s since sales began on friday. but analysts were expecting anywhere from 8 million to 10 million. shares are trading a little lower. they were much lower in the earlier part of the trading session. david ralph is with westwood partners. david, good to see you. >> good to be here, thanks. >> was 5 million a disappointment in your eyes? >> not really. again, is the real number higher because of supply constraints? i think it is. but we went into the trading day up 73% year to date. we have mapgate, we have the news out of foxconn and now a light number. it was ripe for profit taking. i'm actually surprised the stock isn't down more. >> it was down $15 earlier in the session. you mentioned the supply constraints. do you think those are intentional in any way? are they trying to create at

least the perception of scarcity? >> i don't think so. we've been through this drill before with other versions of the iphone. i think what's key is if management says there's a supply constraint, and then we have a quarter where the supply constraints are off, typically they have a blowout number. and i expect the same over the next couple of quarters. >> i've asked a couple of managers for whom this is a large position. i'll ask you the same question. it's a wonderful trap to be in but it is a trap nonetheless when your portfolio becomes top-heavy because of apple's appreciation. it's too large a chunk of your overall pie. what do you do about that and are there entry points and exit points specifically around which you are trimming the position? >> yeah, we had to trim twice in the first quarter. we won't let a stock get more than 10% of our portfolio. and the key in our minds is valuation. we think fair value on apple right now is about $850.

we don't have valuation concerns. we would be trimming first if -- once it approach that had 10% weighting again. >> 10% weighting. >> yeah. >> that said, there's a good chan october could be just as eventful as this past couple of weeks has been if we get a relaunch of itunes or get an ipad mini. your expectations going into what we know will be a tusht quarter macro wise. but what does it mean for apple? >> we're looking a little bit further ahead than the next quarter or two. but the planets are aligning for a huge christmas quarter. and if the supply constraints come off, it's not out of the realm that we could see 240 million, 260 million iphones in fiscal 2013. that's where we're going to keep our eye on the ball. it's tough to gauge cartquarter quarter. >> there's always the question of maps. they've had controversies in the past regarding batteries. but this one landed on the front

page of "the wall street journal" and is feeding the worry that they are ill-equipped to separate their eco system from google's. long term, what do you think that says about a post-jobs area? are we in dangerous territory there? >> i don't think we're in dangerous territory. but i will admit and agree the problems with siri, the problems with the map, it's a data-driven reality. and apple -- this isn't their dna. so it's going to be challenging. but my only beef with management is maybe they oversold this at the product launch and they could have reduced some expectations. i'm in downtown boston right now. the maps did just fine. i typically need a local sherpa to get around downtown boston. i think a lot of the noise and the excitement this weekend was a lot of the blogosphere going into overdrive. i think things will calm down. but apple has an issue on its hands and it will be

management's test to rectify this and get to that great, if not insanely great, customer experience with maps. >> i remember driving in downtown boston. i asked a cop for directions. he had no idea what i was looking for either. david, good stuff. thanks so much. >> thanks. let's get over to bertha coombs. a market flash. this time on google. >> everyone's been watching apple. google has taken out, soaring high. and the very interesting thing is google had its historic close back in november of 2007. its p/e back then was a lot bigger than it is now. so one could say in effect on a valuation basis it's cheaper now. it has a price/earnings ratio of 22. it was 50 back then. when we come back, we'll count you down to the close in europe. 9:20 left. back after a break. [ male announcer ] when this hotel added aflac

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let's get to rick santelli in chicago. rick? >> jeff carter's my guest. points and figures. i'm sure a lot of people read jeff's blogs. last week, i read one of your pieces. it was after you came back from a tax policy institute seminar that was in chicago. and one thing that piqued your interest when they talked about a 4% solution. tell me about it. >> i think we fail to understand that there's a virtuous cycle of entrepreneurship. and there's a seminar that they had called the 4% solution, which is a book and it talks about ways to stimulate economic growth in the united states. you talk about it all the time on cnbc. you have policy people on. but really what we need to do is get government out of the way. this entrepreneur thing happens on its own by its own volition as long as tax policy is correct. that's what they were talking about. you get situations like entrepreneurs that become very

successful, fror instance, zuckerberg and some of the millionaires he's created are splitting off and investing their own. they don't just sit on their cash, buy a yacht and sail around the world. >> why is one of the big platforms of this election that very issue regarding tax policy? it seems so self-evident to people we rub shoulders with on this trading floor but not to the population at large. >> they think it's gets muddied. if you talk about the capital gains tax. there was a guest on earlier today that says, what's it mean to somebody making $50,000? lowering the capital gains tax to somebody like that is the most important thing you can do because corporations are going to create jobs. people invest in start-ups that can create jobs and their pension funds will get dividends instead of cash sitting on the balance sheet, which is going to enrich them. and they'll be more productive in their jobs. it's more important for people making $50,000 a year to see a

decrease in the capital gains tax than for somebody like warren buffett to see a decrease in the capital gains tax. >> we're going to preannounce right now who our guest for tomorrow is going to be. private equity has gotten a pretty bad name. but embedded in this conversation, there is a definite private equity theme, whether it's angel investing. you give money and you want it to multiply through the system. >> right. >> private equity's got a real blast because one of the contenders for the presidency, mitt romney, has a history at a private equity firm. but there was an article last week that talked about who the investors in that private equity firm were. and it blew my doors off. we can't give away too much. do you think -- jimmy john talking about leaving the state of illinois. to have that tax policy institute meeting here is almost a little bit peculiar. >> it is funny because illinois has horrible corporate taxes. then you have the deal -- they raise the corporate tax, give deals to these guys. >> and i don't like the deals. we'll have to come back and talk

about it. the deals haven't worked. carl, back to you. >> rick, thanks so much. the bell is about to sound across europe. we'll get that close and all the details on their eventful week still to come in just a moment. this country was built by working people. the economy needs manufacturing. machines, tools, people making stuff. companies have to invest in making things. infrastructure, construction, production. we need it now more than ever. chevron's putting more than $8 billion dollars back in the u.s. economy this year. in pipes, cement, steel, jobs, energy. we need to get the wheels turning. i'm proud of that. making real things... for real. ...that make a real difference. ♪

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got a couple of big data points out of europe today. germany's survey, five months in a row lower. the lowest since 2010. and there's still a lot of news to come out of europe this week. >> there is.

and chief amongst those will be thursday when spain unveils its budget which might be a precursor to at some point further down the line actually doing a deal to get money from the european union. take a look at the figures on the board. >> the european markets are closing now. >> what's interesting is the greek stock market has sunk to a greater extent to what -- most of europe's cut its losses during the course of the u.s. session. however, greece has fallen further into negative territory. can you see it down there on the bottom right? i'm not sure if we can frame that in. it's down almost 3% there. i don't know why. there's a lot of questions over greece, we know that. let me show you some of the issues that have fallen in terms of the stock market. the big blue-chips like the national bank of greece, the telecom operator, hellenic. and you have merkel and hollande

meeting to celebrate their union on saturday. and at that point, there was some disagreements, you would argue about where we are on banking reform. the troika broke off negotiations with the greek government on austerity on friday. there are reports that maybe the budget gap is 20 billion euros over the next two years. others are suggesting the troika won't report until after the u.s. election. we're not quite sure why the stock market's fallen towards the close today. but there are a lot of questions clearly up in the air. the broader question across europe is, at what point does the market increasingly focus on what are arguably deteriorating economic fundamentals and earnings estimates as well. and inevitably, you're going to get profit taking. you see it today where you've recently had the biggest gains. this is a two-month charlotte. the spanish market up 30%. the german market, up only 16%. today is a day of losses with

bigger in spain, but it's obvious given where we've run recently. the broader point about where you invest moving forward is interesting. bnp paribas is pointing out if you went anywhere in europe, strategically short term, arguably you're going to germany because the big blue-chips on the dax there have artificially low interest rates and exchange rates. on the corporate level, be aware that we have quite a big selloff today in tnt. quoted out of amsterdam in the netherlands. today, the stock is in negative territory. and indeed, falling on what happened on friday. "the journal" is highlighting the problems that that company has in getting this antitrust

deal -- i beg your pardon, getting the deal past the antitrust authorities in europe. they're saying, come on, this is market concentration. surely the u.s. can't buy tnt. and now use today the ceo is quitting tnt unexpectedly. that's not expected if she should be driving through the deal there. also on the corporate side today, some of the miners had a big note out suggesting that you should buy the shiny stuff. they believe the precious metals will outperform the bulk of the market. precious metals and base metals should outperform commodities in general. they were downgrading the view that they think bhp billiton is more attractive on a relative basis than rio. and some of the financials in europe are under pressure given the profit taking we've seen. credit agricole may have to inject 700 million euros into its greek operation. and ing could be forced to pay

back about 3 billion in state aid it got in 2008. back to you. >> simon, a lot of information. thanks so much. let's get to courtney reagan to see what's moving on the floor of the stock exchange. >> we've had some of this upward momentum we're gaining in the last hour or so. but as those commodities themselves continue to slide, we're seeing some of the biggest pressure on the materials and commodity-related stocks. take a look at some of the gold stocks selling off, underperforming, both the commodity itself and the greater market, as you can see here, down almost 2% or more across the board for a number of these gold stocks. dow transports bucking recent trends of underperforming and are doing a little bit better today as crude oil prices continue to slide. that's lifting airline stocks, which is in turn lifting those dow transports. citi downgrading both u.s. steel and ak steel for a number of

reasons, not the least of which is this weaker manufacturing data that we've continued to see and the lower price for scrap metal, plus this price premium to what we're seeing in the united states. and that's pulling down a number of other steel-related stocks in addition to those two downgrades. price target lowering and lowering earnings estimates. all related to this commodities, materials, some interesting moves in tire. we're seeing key bank downgrading both cooper tire and rubber and goodyear because they believe chinese tariffs are looming. but deutsche bank is actually rising cooper tire and reiterating its buy on goodyear because they think the uncertainty is a good thing. back to you. >> courtney, thank you very much. let's get a capital markets op ed. gary is here at post 9 taking a look at the pick-up in short selling. >> the viewers asked for this. so i'm doing the work. a number of people have asked

about short interest here on the new york stock exchange and what does it mean? people think because short interest or so it's been reported is at record highs, they call it record highs, that's going to create another buying surge later into this year as people cover the shorts. let's take a look. this is through 2012, april 30th, there was 13 billion shares short at the new york stock exchange. june 14th, 14.7 billion. short interest through august 31st, the lath data we have, down to 13.7 billion. 1 billion shares bought in in terms of listed member firm short interest. i want to bring up a picture. take a look at this picture. i'm not going to say this is the record high in terms of short interest was actually 18 million shares f. you take a look at this specific chart, the reason i wanted to bring this up is very relevant. let's go to the rlittle reveal hill. this picture was 2000 to 2008 and why i think it's so important. take a look here.

this was the s&p 500 peak. short interest had essentially gone from 4 billion shares up to approximately 12 billion shares. when the s&p 500 peaked in -- at the end of 2007 and 2008, short interest increased during that period. conclusion here, conclusion is you cannot draw the conclusion that just because short interest is at significant record high levels that it means anything for the s&p 500. if you go back to the most recent period four years ago, short interest, record highs, s&p 500 peak, short interest continued to go up through the collapse. people were selling right into that weakness in 2008. >> are you suggesting the peak has already passed us or not? >> i'm not suggesting anything. i'm simply suggesting that many people have suggested to me that because short interest at 13.7 billion shares, you're going to have to see people buy in, maybe go down to 11 billion shares, creating the next leg-up in the market. there's a strong thesis out there saying that.

i just wanted to point out f you look at where we were in 2008, it's surprising we jump from 14 billion up to 18 billion at that time. i'm sure when i get off the floor, a lot of these guys are going to have a strong opinion about it. >> thanks, gary. let's get to a market flash. >> we're watching perrgrine pharma. shares down over 75%. the company found major discrepancies between patient sample results and treatment code assignments. some accounting problems there when they reviewed their mid stage data. clearly the street very disappointed here. this stock climbed up to $4 and change. today, very much under pressure. >> one of the dangers of anything in pharma and biotech. seems like everywhere you

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to shares of apple when selling 19 iphones a second isn't good enough? and marisa meyer unveils her plan for yahoo!. and what's the biggest mistake you can make until the end of the year? see you in about 20 minutes. >> inconsistencies with apple's new maps app have started putting pressure on google to find a solution. dennis burman and drew olin join us. what a topic we have to tackle. drew, i want you to describe for me your own vision of what apple maps is. i don't know if i can say it on television. >> is this for me? >> yeah, for you. >> apple decided a while ago that it was going to go out on its own and do its own maps thing. that's either because business dealings with google became sour

or they want to own it all. whenever they decided it and started it, it shows. to me and a lot of other people, it feels like a half-baked product, the data isn't great and it's not the quality and the experience you would expect from an apple product. >> and you're being kind compared to things -- you put on paper. >> i'm being very kind. >> dennis, do you agree and how important is this when we're selling 19 phones a second? >> the product stinks, okay. it really stinks. that's fine. but we have to ask ourselves a year from now or even six months from now, is there going to be the same problem with the apple maps? you have to think generally not. they have the resources to make it a better product. accepting where we are today, you have to ask yourself, is it a good thing or a bad thing for the consumer? i say it's a good thing. apple's move into maps and the crummy move into apps shows that they are scared and they're scared of google. that's creating competition, creating new products. over the long run, it's good for the consumer.

>> drew, you met with the google maps team this past friday afternoon at the google plex. >> i did. >> they were gloating, right? >> well, you know what, they weren't -- they won't give me an exact date on when a native ios 6 app will come from google maps. but it's very clear -- the motorola mobility team put out a little ad with the #ilost. they're making fun of it. but google is heads down. they've been doing maps for eight years. their processes and the staff that's on this product is astounding. can apple do it? i'm sure. they're a smart company. the question is, this consumer issue we're having right now, i don't know if it's a good thing. i disagree on that. i think it's a bad experience especially when it comes to location. >> i'd say it's a bad experience right now, no doubt about that. but long term, the smartphone market was dominated by apple in

2007. and the android eco system however patent infringing it may be is creating a viable competitor. in the long term, that has to be a good thing. >> drew, if you're google at this point, your argument is, wait to launch your own app. why? >> make it beautiful. so designing for ios, it's a process. there are a lot of real smart, talented people who do it. but i don't think google should rush something out there to have a native app. if i'm google, i let apple feel a little bit of pain for a while. we're talking about location. we're talking about where am i right now and i need to get to a meeting right now. and apple's failing on that. that makes them look really bad. if i'm google, i let them look bad for a while and i'm not in a rush. >> but eventually you have to think they're going to come up with a native ios app. and that's fine. make them hang out there a

little bit. but there are lots of independenting mapping apps out there that do a good job. i'm not affiliated with this company at all, but i will say waze is pretty good for driving directions. there are other ways. believe it or not, beyond apple and google. >> sure. it's funny. we had a google mapping truck taking street view pictures in our neighborhood the other day. it's a reminder that this is really a function of time, isn't it, drew? google has simply had the time to get on the street and refine the algorithms and everything else. >> yes. friday shthey showed me what happens when they can't connect dots on a road. they will send a street view truck out to rephotograph it. it's that kind of system. can apple do that? sure. but we don't have it right now and people are lost, literally. >> carl, can we push this forward a little bit. it's fascinating to see we're on television right now.

and there are so many antitrust issues about whether you have access to the air waves and so on. but going forward, this is an interesting legal question. what are the antitrust issues inside these eco systems? what if google says, we're not going into the apple eco system as all. is that their trust, is there an antitrust issue there? be interesting to see how the law evolves that pushes more to the digital internet mobile space in a way from the classic air waves as we know it. >> it will be like separating bowls of spaghetti. very difficult to do. good to see both of you. >> thanks. >> we'll try to make our way back to the office. meantime, a big interview last night on "60 minutes" with president obama and republican presidential candidate mitt romney. when we come back, larry kudlow is here live at post 9 to lay out his take on last night's must-see tv. a crash management system and the world's only tridion safety cell

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mitt romney and president obama both profiled on last night's "60 minutes" as the race heats up for the november elections. who better to bring in than our very own larry kudlow here at post 9. good to have you. >> thank you, carl. >> talk to me about what you found interesting last night. >> i watched the replay of the thing. i think we have a tape. mitt romney actually pushed his tax cut pro-growth plan. they said it couldn't be done. i think we can take a listen. >> well, the current rates, less 20%. so the top rate for instance

would go from 35% to 28%. middle rates could come down by 20% as well. all the rates come down. but we're also going to limit deductions and exemptions, particularly for people at the high end. >> it's so interesting to me. i'm glad he's talking about specific tax rates, which is what people pay. the middle class tax rate will drop from 28% to 20%. and in some cases it's going to drop a little bit below 20%. that's a very significant tax cut for middle income people. and he's not going to take their mortgage deduction away. that's probably $1,500, $1,600 minimum to pay your mortgage. i don't know why he doesn't just swell dwel on that, go right to the middle class tax cut. that's what reagan and many others pushed. i'm glad he's going there. >> you're convinced the mortgage interest rate, the deduction is safe? >> i think it's not safe for upper end.

in fact, i think it may be dead for upper end, as in phased out. but for middle class people, yeah, he's not going to touch that. in fact, i doubt if he'll touch any middle class tax deductions at all. the people that are going to get hosed are the upper end and they should if their top rate goes from 35% to 28%. fine. it's pro growth. but it's fair and you get some revenue back from getting rid of the deduction. romney needs to really stay on that message. it's funny. today's poll from george washington university, highly respected, obama has a three-point lead. that's about consistent. i think obama has a slight lead. when you look at the middle class, obama leads 19% among those who stand up -- who think he stands up best for the middle class. 19%. but if you ask middle class people who they favor, it's even. 4 48-48. and if you ask something called

middle class families, married with kids, middle class families give romney a 14-point lead. now, that tells you there's a lot of movement inside these categories. and i think generically the president's taken a slight lead but it's still a real horse race. >> the first debate on october 3rd, how often are they game changers with six weeks left in the cycle? >> you know, my experience is not that often. mostly -- they're so well-rehearsed. they play defense and don't like to make bold statements. now something might really come out of this thing. but i don't see it as kennedy/nixon or reagan/carter. but who knows? those are the two exceptions. but i think mitt romney is an underrated debater. he may not be as sophisticated as president obama, but i watched romney chop down

gingrich, who is a brilliant debater. and you did, too. and then we watched romney chop down rick santorum, who wasn't bad. so all i'll say is, don't underestimate mitt romney during the debates. >> then you've got -- i have to ask about peggy noonan who's railed on them twice. wants jim bake tore come back in and salvage to whole -- >> jim baker, we all love jim baker. >> she says republicans today, she tweets that republicans have thanked her for instilling some discipline into this campaign. do you agree? >> perhaps so. all i want is an economic growth message. this is about jobs and the economy. lower taxes. lower spending. lighter regulation, particularly on energy. in my humble opinion, it's a great message for mitt romney because the president is going to go for higher tax rates and more spending and more regulation. you have a contrast. but to make a contrast work, you

have to set up a contrast with great clarity. so i think it's more a message issue than a real management issue. >> larry, see you tonight. >> my pleasure. >> the host of "the kudlow report." keep the tweets coming. "the times" says apple could be the first company to be valued at $1 trillion. fill in this sentence. at $1 trillion, only then will apple be able to do blank. we'll read your answers after the break.

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"squawk on the tweet" on this monday morning, "the new york times" says that apple could be the first company ever to be valued at $1 trillion. we're asking you to fill in the blank. at $1 trillion, only then will apple be able to, blank. phil writes, open their own bank, further stabilizing their empire. joe writes, convince skeptics it's for real. and derek writes, have the hoodie declared illegal. gary kaminsky back here at post 9 with an update sort of on -- >> we showed you that chart. the viewers have asked about it. again we looked at short interest here at the big board. there's the chart. art cashin says he does buy into

that thesis that you will see continual buying, a floor on the market as people continue to buy in shorts, down 1 billion shares this year. on the other hand, peter boockvar points out to me that short interest as a contrary indicator is not necessarily a great thing to look at. over the long term, those heavily shorted stocks, short sells tends to be right. the short interest for those stocks is hard to make those connections. >> i love asking you this question because we're coming up on quarter end. this is the last week of the quarter. "the journal" argues there are some who have rid tennessee rally who are going to want to sit out the last quarter. who knows what's going to happen? on the other hand, we've talked about relative performance for weeks. what's the larger dynamic. >> if i was one of these managers up 26% this year and i was basically blowing away the s&p, i'd take money off the table. not worry that much about la